The Juice and Smoothie Bar industry in Australia is fruitful and booming, with 4.1% projected annual growth and generating $360 million in revenue. This rapid growth has been driven by a health and wellbeing trend that began in the early 2000s. With this trend projected to continue driving industry growth, there’s never been a better time to jump on board the juice bar bandwagon. If you are thinking of opening a juice bar or smoothie bar, here are some legal questions to consider:
1. Have you considered franchising?
Today, the largest player in the Australian market, Boost Juice Bars, continues to dominate the industry with store numbers increasing by more than 40% over the past five years. With its dominance of the market, the business has shown how a successful franchise network can be run. The majority of its 70 stores are franchises and individual franchises own approximately 70% of its network. There are many advantages of franchising such as the support of the franchisor and the pre-existing relationships with suppliers. The franchise business model has been consistently proven to be the most effective way to achieve growth and profitability in a relatively short period.
The largest players in the Juice and Smoothie Bar industry exist as franchises that license the franchise name and business model. Becoming a franchisee presents a relatively easy way to enter the market. Moreover, franchisors usually have pre-existing relationships with fruit suppliers. Given the seasonal nature of demand for juices and smoothies, the ability to control stock and inventory is critical. An established franchise model is likely to be not only able to forecast better stock levels but also avoid unnecessary stock waste.
2. What are your leasing arrangements?
Rent costs for juice and smoothie bars can be significant. Indeed, most successful juice and smoothie bars are located in highly populated areas such as shopping malls, airports, and metropolitan centres. Given the majority of business operators do not outright own their shop fronts, many businesses lease out space to operate. Furthermore, many juice and smoothie bars save on rent costs by operating out of booths and pop-up stalls compared to traditional shopfronts.
Commercial leases often lock tenants into 5-10 year arrangements. From fit-out obligations to exclusivity clauses, you should have a leasing lawyer review your lease before you sign the dotted line. As rent costs are trending upwards across the majority of retail industries, having your lease reviewed can significantly save you costs in the long-term.
3. Are you employing part-time staff?
Wages account for a significant share of costs for juice and smoothie bar business owners. Common for the retail industry, many employees working for juice and smoothie bars are on a part-time arrangement. As an employer, you need to recognise that part-time employees receive the same minimum entitlements as their full-time counterparts. This means sick leave and holiday leave is calculated on how many hours they work each week.
Each employee must sign an employment contract which sets out their employment status, hours of work, pay rate and classification level. The Fair Work Act 2009 (Cth) sets out the rights available to employees, including number of hours per week part-time employees are entitled to work. An employment lawyer can assist you with drafting a contract for your employees.
The future for the Australian Juice and Smoothie market remains bright. The increasing trend in health and wellbeing, coupled with operators diversifying their product range, will continue to grow the industry over the next five years. Opening a juice or smoothie bar is a big investment – make sure you understand your legal obligations before you enter any agreement. Questions? Call us on 1300 544 755.